BlackRock Eyes Spare Change With Bet on Small-Time Investors

BlackRock Inc., already sitting on a mountain of assets, is turning its attention to a much smaller market — your pocket change.

The $6.3 trillion money manager said it became an anchor investor in Acorns, an app that allows rookie investors to put spare change from everyday purchases into diversified exchange-traded fund portfolios, according to a news release Wednesday. The firms said they will partner on new technology they can provide for Acorns users.

The relationship gives the world’s largest asset manager a chance to work with a startup focused on small-time investors who squirrel away a few cents at a time — a far cry from the sovereign wealth funds and pension funds that populate much of BlackRock’s client base.

BlackRock is the biggest global ETF provider, with more than $1 trillion invested in its iShares ETFs. It doesn’t sell its mutual funds or ETFs directly to retail investors as some of its competitors do. Acorn already offers BlackRock ETFs to customers alongside other products.

The average size of an Acorns account is about $500, according to a company representative, who also says its customers are mostly 18- to 34-years-old. The Irvine, California-based firm has more than 3.3 million investment accounts and its least expensive offering charges $1 per month for an automated investing plan that provides customers robo-generated “smart portfolios.”

The partnership also gives a BlackRock representative the right to observe Acorns board meetings. BlackRock’s chief marketing officer, Frank Cooper, will have that role.

Larry Fink, BlackRock’s chief executive officer, highlighted the significance even small-time investing can hold in a letter to shareholders in the company’s 2017 annual report. Fink played up his early lessons in investing from his parents, a shoe store owner and English professor, and described purchasing his first stock, DuPont, when he was 13 years old.